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Finance Minister Jim Flaherty (VICTOR RUIZ CABALLERO)
Finance Minister Jim Flaherty (VICTOR RUIZ CABALLERO)

Globe editorial

Washing their harmonizing hands Add to ...

Stephen Harper's Conservatives wish to have it both ways. For years, Finance Minister Jim Flaherty has lobbied the provinces to harmonize their sales taxes with the federal goods and services tax. Now that two provinces have complied, some Conservatives are shrinking from the ensuing controversy. Don't blame us, they're saying; it was all the provinces' idea.

The first such claims came from the backbenches, with British Columbia MPs Dick Harris and James Lunney and Ontario's Larry Miller claiming that harmonization was strictly a decision by the governments of Gordon Campbell and Dalton McGuinty. "I want to make it clear that this was a change initiated by the province of Ontario and was not a decision made by the federal government in any way," Mr. Miller wrote in an opinion article. Mr. Lunney publicly encouraged a disgruntled constituent to contact her provincial representative.

Given the rigid message control by the Prime Minister's Office, it could have put a stop to this. Instead, it piled on. "If any Ontarian is concerned about this provincial decision, they should contact his or her MPP," Dimitri Soudas, a spokesman for Mr. Harper, said late last week. "We said that we would accept the decision of any provincial government to proceed with the harmonization of the sales tax, but ultimately the decision is a decision that needs to be made by the provinces."

Mr. Flaherty made clear what he wanted the provinces to do. His 2008 budget called harmonization "the single most important step" that provinces could take to improve competitiveness. He repeated that message at various points last year, acknowledging that he was "gently nudging" Ontario in particular. It has been widely reported that he actively negotiated with the provinces to ensure that compensation from the federal government - which turned out to be $4.3-billion for Ontario and $1.6-billion for B.C. - was enough to convince them.

The Tories' disingenuousness could derail the growing momentum for a worthwhile reform. As Mr. Flaherty said, a single sales tax helps industries by reducing needlessly time-consuming paperwork, and by providing billions of dollars in cost savings. (It also tends to have minimal impact on consumers, despite new tax on some items, once businesses begin passing down the savings.) But the Conservatives have now signalled to the provinces where there are still two separate taxes - including Manitoba, which has reportedly been considering harmonization - that they will be hung out to dry once the change has been announced.

Mr. McGuinty and Mr. Campbell boldly chose long-term economic good, despite inevitable short-term public anger. Their federal partners in harmonization seem to have weaker stomachs.

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